Real estate transactions in the state of Louisiana use several types of deeds to convey ownership of property between a seller and buyer. The differences in the deeds are in what they promise between the seller and buyer. These vary from very little protection (as offered by a quitclaim deed) to significant warranties (as provided by a general warranty deed).
Deeds vary in length – from one page to several – and an attorney typically prepares them. After all the parties sign, these documents become defensible in transferring property between two parties according to Louisiana law.
Titles and Deeds
A title describes ownership of property. A person who holds a title to a house has legal rights and control over that property. A single person or two or more people can hold a title. Corporations, organizations, partnerships and trusts can also hold titles to real property and have the same rights of ownership and responsibility as individuals.
A deed is a legal document that transfers the title of a property from one entity to the other. The person selling or transferring the property is the seller or "grantor," and the individual taking possession of the property is the buyer or "grantee." There are deeds to fit nearly every circumstance between a buyer and seller.
Defining the General Warranty Deed
In Louisiana, a general warranty deed guarantees that the seller possesses a good title, meaning the property they are selling has no liens or encumbrances. The seller also agrees to defend the buyer against all arising claims. A general warranty deed allows the seller to transfer ownership of a property by guaranteeing that they legally own it, and a buyer can seek legal recourse against them if problems arise after the transaction. This type of deed offers the most protection for the buyer and dates back to the property's origin.
General warranty deeds get filed in the Louisiana parish where the property is located and must meet these requirements to be legal:
- They must be in writing; audio and video contracts aren't legally binding.
- They must identify the buyer and seller by name.
- They must describe the property by its address and parish location.
- They must convey the seller's guarantee and precisely what it implies.
- Both parties must sign and notarize the deed.
Defining a Special Warranty Deed
A special warranty deed is much like a general warranty deed in that it guarantees that a property is free of defects. However, it isn't as wide-reaching as a general warranty deed, which covers the property's whole history. A special warranty deed covers only the period of time when the seller actually owned the property and doesn't protect against problems in the title before their ownership. The buyer, therefore, assumes responsibility for any issues due to previous owners.
A special warranty deed contains these elements:
- Names of sellers and buyers.
- Property's physical location by address and parish.
- Guarantee that the property is free of encumbrances or debt other than those in the deed.
- Promise from the seller that they rightfully own the property and have a legal right to transfer it.
- Assurance from the seller that the property has no outstanding liens or claims from creditors using it as collateral.
- Guarantee from the seller that the title will withstand any third-party claims to ownership.
- Promise that the seller will take the necessary steps to make good on the buyer's title to the property.
Defining a Bargain and Sale Deed
With a bargain and sale deed, the buyer gets no protection from encumbrances or liens. The deed states that the seller holds the property title but does not state that it is lien-free. It also doesn't guarantee that title defects won't appear, and the buyer will have no legal recourse if they do.
Frequently found in tax sales and foreclosure actions, bargain and sale deeds get filed when a property's history is largely unknown. The current owner is typically a lender, such as a bank, or a taxing authority that doesn't have much information on who the previous owners were.
Defining a Quitclaim Deed
Quitclaim deeds are popular in Louisiana when transferring property between family members. They allow a seller to add a spouse to the title, enable parents to give real estate to their kids, and allow siblings to transfer properties between one another. An insurance company may also use a quitclaim deed when finding an additional owner of the property; often, they'll want to ensure that the person doesn't make an ownership claim in the future by putting their name on a quitclaim deed.
A quitclaim deed impacts only property ownership and deed or title names but does not affect a property's preexisting mortgage. For example, when two owners divorce, they'll share responsibility for the loan repayment if both their names are on the mortgage, regardless of having been removed from the title by the quitclaim deed.
Louisiana Property "Race" Recording
Louisiana law follows "race" recording. This means that the first person who records the deed holds ownership priority over anyone else if a dispute arises. The voluntary transfer of property ownership through this deed is not entirely effective unless it is part of the parish land records in its location.
This makes it effective against third parties. Recording the transaction details a clear chain of ownership history and makes the process more straightforward in future dealings.
Writing and Filing a Louisiana Quitclaim Deed
State parishes maintain records for properties in their area. Property owners can record real estate holdings online if this service is available in their parish, or fill out a standard printed form. Quitclaim deed forms should contain:
- Buyer and seller names and contact information.
- Property's detailed legal description.
- Identity of the person who filled out the form for the quitclaim deed.
- Information as to where the parish should send the stamped copy of the deed.
- Price to purchase or otherwise transfer the property.
- Signatures of the buyer and seller.
- Signature of a witness to the transfer.
- Signature of a notary to attest to everyone's involvement.
After completing the form, the owner should file it with the parish where the property is located and pay the recording fee. If the quitclaim deed is less than five pages long, it will cost $105 to file.
Defining Special Purpose Deeds
Special purpose deeds come into use in court proceedings or when the deed is from someone acting in an official capacity; these usually offer little to no protection to the buyer. For example:
- When someone dies without a will, a court-appointed administrator disposes of the deceased's assets through an administrator's deed, which conveys the property's title to the buyer.
- When an individual dies with a will, the estate's executor will use an executor's deed to dispose of the decedent's assets and transfer the property's title to the buyer.
- A successful bidder gets a sheriff's deed at an execution sale, which satisfies a judgment against a property owner, and the buyer will receive the debtor's judgment title.
- A tax deed grants property ownership to a government entity when an owner fails to pay property taxes; this entity will sell the tax deed at auction to the highest bidder who offers a minimum bid of the outstanding taxes with interest and associated costs.
A borrower who is in default on a mortgage gives a deed in lieu of foreclosure to the lender, which helps prevent foreclosure proceedings. If the lender accepts it, termination of the loan occurs. A gift deed conveys a property's title from one entity to another with no other exchange – family members may use it to transfer property to other family members or to a charity.
This conveyance may occur during the owner's lifetime and must contain language stating no consideration or expectation for the property has changed hands. If the language isn't clear, or the deed has references to consideration, a legal contest may occur.
Donating Property in Louisiana
In Louisiana, a property donation can occur through a will or in executing an Act of Donation. The property records are filed in the property's parish location, where they become public record. When executing an Act of Donation, both parties must appear before a notary.
However, the Act can occur in two parts: the donor can give away the property in front of one notary and the person receiving it can be with a different notary to accept it, even at a different time or in a different state. Louisiana requires two witness signatures along with donor, donee and notary.
The completed Act of Donation form must show a full description of the property, its current market value and the full name and contact information of the donee. The donation of property is irrevocable; if the donor's circumstance changes, it is not easy to undo.
Bond for Deed Contracts
A Bond for Deed contract is an agreement used for homes that can be challenging to sell or finance. It allows the buyer to pay the purchase price in installments and the transfer of title takes place when the payments are complete. Some people confuse owner financing with a Bond for Deed contract, but it is only one type of owner financing – a credit sale, for example, transfers title at the closing. In either case, the buyer can:
- Make payments directly to the seller.
- Make property repairs and negotiate these and the property's value with the seller with no external appraisal.
- Make nontraditional repayments to the seller.
Bond for Deed contracts have advantages and disadvantages. They allow buyers and sellers to work through the home sales process much faster and more flexibly than they usually would with a standard bank loan. Also, as this type of contract is directly between buyers and sellers, bad credit does not impede a property's purchase. For example, individuals with poor credit due to a divorce or loss of employment can still buy a home through a bond for deed contract.
Disadvantages can include the absence of a critical appraisal and greater competition for real estate, particularly when the seller shows a willingness to finance the sale for the buyer. Finally, with a Bond for Deed agreement, there is a greater possibility of losing title to the property if the buyer cannot make payments as set out in the contract.
- Warranty Deed: Louisiana General Warranty Deed
- Atlantic Bay: What’s the Difference Between a Title and a Deed?
- Investopedia: Special Warranty Deed Definition
- Template Roller: "Bargain and Sale Deed Form" - Louisiana
- Title Plus Real Estate Transactions: The Louisiana Quitclaim Deed
- Legal Templates: Louisiana Quitclaim Deed
- Investopedia: Understanding Property Deeds
- Menzer Law: Real Estate Donations
- Southern Title Online: Louisiana Bond for Deed Transactions
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.